It sounds like a good plan, and increasing the number of houses will make the big cities in CA more affordable.
However, there is going to be a lot of pushback from the big cities against this since homeowners will potentially lose trillions in property value if the housing market goes from 11.5 million dwellings up to 15 million.
Supposedly setting housing standards at the national level if why housing is more affordable in Tokyo despite it being a large city with a large population density. So CA state overruling local regulations could do quite a bit to make housing more affordable.
But how will this play out? Lots of people with homes worth 6-7 figures won’t want the housing market filled with new homes since it’ll drive down prices. Plus won’t it cause local tax revenue to decrease if home prices decline deeply? So local governments would oppose it too.
This is California with its strange (by my standards) property tax rules. In other states if property values fall, the local government would simply raise the mill rate to maintain revenues. In California, it might even be easier, though IANAC. Aren’t taxes locked in based on the purchase price now? This would mean that they’d not be lowered if the property values fell. In any case, the new property would certainly add to the tax base.
Nope, doesn’t work that way. First of all they do rise, but only at a maximum rate of 2% a year, well below where CA homes generally appreciate. However if home values fall the counties are supposed to re-assess them down. If they don’t or you don’t agree with their assessment you can petition them to do so/do over and they are required to follow through. If and when the values rebound the tax rate can climb back to where it “should be”.
All of the above happened with me during the Big Crash. County reacted, but only froze the 2% climb. I petitioned for a reduction. They did an actual assessment, agreed and dropped my property taxes by A LOT. When the housing prices rebounded, my property taxes shot back to the prorated +2%/year assessment.
But this is absolutely the case. Frankly home values have risen so sharply, particularly in the last 5 years, that I doubt more than a few people would see a real loss. Just less of a gain.
ETA: All that being said, I’ll believe Newsom’s proposal when I see it. A push above 80,00/year may well be doable. 500,000/year seems like an unlikely bit of an over-promise.
Based on what I’ve read, this is a very worthy goal – the “housing crisis” is almost entirely manufactured by bad policies (NIMBYism and similar phenomena), and simply based on artificial restrictions placed on the housing market.
I think the proposal is simultaneously awful and unrealistic. It’s unrealistic because the figure is so far outside what has historically been possible that at best I would characterize it as aspirational.
NIMBYism is party responsible, but right now I think a bigger factor in why units aren’t being built is because they are too expensive to build. Even developments that are fully permitted and ready to go, builders may wait to get more favorable conditions. Building is really expensive, and any large project is required to allocate a certain % of units to low income. As a result, the other units in development need to be priced higher to compensate, stratifying the market even more. Combine that with the region having three major fires in the last two years, and builders are in high demand and can charge even more. The cost of capital is also quite high, and some builders are unable to get financing for projects that are approved.
Right now what is in the legislature is a bill pushed by San Francisco State Senator Scott Weiner, SB50. SB50 does a number of things, but one of them is virtually eliminate single family zoning in the state. Fourplexes would be allowable anywhere by right (no approval necessary), and this bill is a big part of Newsome achieving his goal. It’s getting quite a bit of pushback, and there is a major committee hurdle to clear by the end of the month. In it’s last iteration, through negotiation with another state senator, the bill was changed to relax some requirements for counties with less than 600K population. Surprise, the person he made the deal with was from Marin County, and they have less than 600K population. The NIMBYs are also in the legislature. Newsome himself was from the North Bay, and often those areas didn’t meet their housing requirements.
There won’t be pushback from the big cities - they seem to be in on it. There will be pushback from the hundreds of smaller cities who are going to be caught up in these one size fits all rules that are being pushed.
That part is confusing to me, I thought a big reason there was a housing shortage in California was residents in big cities (especially SF) wanted to keep the prices high by making it hard for new units to be built.
Also aren’t the smaller cities more reasonably priced?
Ok, so I have to question your reasoning a bit. For the areas with severe shortages, where an 1100 square foot home is 800k to north of a million, you could generally fit about a fourplex in the same lot if you are allowed to make it 4 stories and are exempt from lot coverage limitations. (that is, you can build all the way to the back fence and all the way to the front sidewalk if necessary, similar to a NYC brownstone)
If the local zoning board can do nothing but say “here’s your permit”, what super high amazing costs are going to prevent mass conversions in the relevant areas? (and incidentally, meeting this politician’s aspirations)
I think you are saying the building materials involved and labor, in converting a lot from a value of ~800k to one worth about 2.4 million, are too expensive. (4 times as much rentable space, but some loss in value since the space is denser and each potential tenant has less privacy and has to share)
Note that if it’s really “must approve”, builders could use a pre-approved design and also convert entire blocks in one go - if they are allowed to make the fourplexes cookie cutters, then the earthquake and solar and other special california requirements would already be engineered in. Only the materials and labor would be more expensive, and cookie cutter mass development saves substantially on the labor.
Just pencil arithmetic says that builders can probably demolish an 1100 square foot home and build a 4000 square foot 4 story unit for less than 1.6 million. They do it routinely for about 400k in cheaper states…
To be fair to your argument - eventually during this mad building rush, enough units would be added to the market that no longer would that 1100 square foot dwelling be worth $800k. As the gains drop, eventually an equilibrium would be reached. But if the numbers of tech jobs added to california are correct, that’s a looong way away…
It’s worth asking: Who is going to build those houses? And out of what?
To achieve the stated goal, they must be built at a monthly rate around 7.5 times that of the past 10 years. If you make the (unreasonable to the point of absurd) assumption that you can quickly triple the number of people building houses in CA, each must immediately become 2.5 times as productive.
There will be a corresponding huge increase in the materials and supplies that are needed to build those houses, the trucks that are needed to haul them around, etc. This will cause the price of those things to spike massively, and the quality to decline.
There’s an element of NIMBYism that exists everywhere, but it’s not as prevalent in the bigger cities as it used to be. There are quite a few YIMBY groups that have gained momentum, and larger cities have gotten more progressive. The concerns of these cities include increased homelessness, lack of affordable housing, gentrification, etc. Rent stabilization (rent control), as well as densification, and increased affordable housing requirements is quite popular in the larger cities I’m familiar with like SF, Oakland, San Jose, etc.
NIMBYism isn’t the only reason prices are high. There’s a staggering amount of demand fueled by increased job growth. From 2010 to 2016, the Bay Area has produced something like 720K jobs, primarily in the large counties of San Francisco, Santa Clara, and San Mateo. But over that same time period, there have only bee like, 100K ish housing units added. That’s a lot of increased demand. Many of those jobs are relatively high income - over 100K, and north of 200K.
But in those same locations that have produced those jobs, like at Apple, Facebook, Google, etc., they aren’t producing the housing in the county. In San Mateo during that time period, the jobs to housing ratio created was 17:1. So those folks get pushed out further in the area, increasing commute times, congestion, and demand for services. If you live 40 miles away and commute 1.5 hours or so each way, your kids are going to go to school where you work. Many of those outter region cities are bedroom communities, and have trouble keeping up with the infrastructure demands that this brings. Demands for schools, police, roads, etc.
Smaller cities may be more reasonably priced, but not by that much. Because of the lack of housing created near these jobs, demand has picked up all across the bay area. But typically single family housing units are a net loser for a city. They don’t provide enough property tax revenue to cover the increased demand on services. Cities try to mitigate this by charging impact fees to developers, fees to offset the increased infrastructure costs, however there are currently bills in the legislature that would cap or eliminate these fees, hamstringing smaller cities who would be unable to provide services. So it’s not simply NIMBYism, but also there is elements of feasibility.
Larger cities that create these jobs, they are infavor of these statewide or region wide efforts that would force surrounding regions to essentially subsidize them by providing the housing that they have not. So no, the big cities are in favor, and the small cities get squeezed.
Possibly - It may fit, but that doesn’t talk about traffic, parking, schools, police, etc. These cities and city budgets did not grow from massive overnight densification.
None? I mean, that’s the intent of making fourplexes by right statewide. To increase density and encourage infill build projects. I think it will negatively impact neighborhoods, but the state doesn’t seem to care very much. I don’t live in a big city. I purposely chose to live further out to get more space, to avoid density. The state is trying to change that top down.
The problem is multifold. First, your assumption about building a 4000 sqft fourplex for 400K assumes $100/sqft. For a single family home in the bay area, the cost is closer to $600/sqft. That changes the calculus on a lot of things - and a fourplex would be more expensive. But there is an even larger problem - the intent is not to build luxury condos. The state is interested in creating affordable housing. They do this by deed restricting the properties and cap the price. Builders have trouble recouping their costs if they are not allowed to sell for a market rate. The state isn’t interested in building market rate units. In SF for example, their inclusionary housing requirement can go up to 35% of units built. So if you build 100 units, 35 of them need to be considered affordable. It’s hard for a project to pencil out that way. The way it gets done is to make the other units super luxury that can charge a super high price, and instead of building the inclusionary units on site, they pay an in lieu fee and either build the affordable units somewhere else, or simply contribute money to the city so the city can use those in lieu fees to support affordable projects somewhere else.
NIMBYism is part of the issue, however lack of financing, builder shortage, and projects that dont turn a profit I think are at least as significant. Several laws recently have streamlined approval process for projects, but they still have trouble getting built because they don’t pencil.
I think we may have differing definitions of small towns in California. I’m talking about actual small towns a couple hours from the big cities like Taft or Buttonwillow (near Bakersfield and two hours from Los Angeles). Median Home prices there are about 120k.
How will they get short changed? My impression is the bottleneck was regulatory, would this proposal require tax hikes statewide?
Also I thought sf had regulations against high rises and things like that that contribute to the housing shortage.
Housing really seems like one of those issues that the market can and does solve, when it’s relatively free to do so. I think some regulations and zoning are reasonable (environmental, safety, etc.), but “I like my neighborhood the way it is” doesn’t seem like near enough justification to restrict the market from meeting the needs of American consumers.
Buttonwillow is about population 1500, so that’s pretty small. I’m referring to cities around 10K - 50K. Taft is more in that vein, however it’s pretty far from anything. It is in Kern County, which is over 600K people so would be subject to the rules under SB50.
But look at a place like Mountainhouse. People commute from there to all over the bay area. Can that small town support the rapid densification? It’s not like if they fill the place with 8 story towers all the sudden they will have enough funding to cover the infrastructure like roads, schools, police. Nevermind the horrendous traffic. No, the places that cause the increased demand with rapidly increasing jobs, should provide the housing that is the downstream impact of those jobs. Those places should be funneling money to the outer regions to support the increased burden on infrastructure. But that’s the opposite of what is happening - the larger cities are gathering together to push laws that would force small communities to bear the burden of the lack of local housing where jobs are being created.
Current proposals include siphoning money from these smaller cities, and diverting it to the larger cities.
As for SF - it’s somewhat unique because there just isn’t that much land. Combine that with the inclusionary requirements and the cost of building makes many projects infeasible. What does work is luxury condo towers like you see now all across the SOMA area. But those do nothing for affordable housing when they cost 1.5M and come with a $1,500 monthly HOA.
Let’s say there is a single family zone that has something like 500 houses in a subdivision. There are a few local schools, and primarilycollector roads with maybe one arterial. Should there be a restriction on demolishing one of the local bocks to put up an 85 ft high density rental complex? What would you consider sufficient environmental or safety reasons to limit that type of build?
I think I’d need more info. If those protesting can make a good case that there aren’t and cannot be enough community resources (schools, services, etc.) to support the development, then maybe that would be sufficient IMO. If it’s about harming the skyline, and views, and the quality of the people that will be moving in, then it wouldn’t, IMO.
In my experience, NIMBYism frequently is about affluent people not wanting less affluent people moving in, and not wanting their views/skyline changed, and similar concerns that strike me as bullshit (and often bigoted).
Outside of specific coastal designated zones, there are no inherent view rights so objections about skylines don’t carry much weight.
But it’s not only what is possible, but what is being proposed. Sure there could be more funding for schools, but that’s from the county and building is approved at the city. And it’s not like new roads get built overnight, but the demand will certainly be there once the build is complete.
So yeah, let’s say a developer wants to put an 85 ft structure adjacent to your property, asks for zero lot lines and no parking requirements. Are you good with that?
I can’t tell what you would consider sufficient to oppose and I’m trying to tease that out but you’re being kinda vague.
More density would greatly benefit my community, and provide a lot of things I love or find very positive – ethnic restaurants, shopping, workers, etc. I think parking requirements ought to be cut down, especially in places like my community which has great public transportation. I see no reason to subsidize car ownership in metro areas in which cars aren’t necessary for everyone (like the DC metro area).
I’m not sure how to answer except on a case by case basis, but based on what you describe for this hypothetical, it would be a boon.
Personally, I’m very pleased when I see a new big housing development under construction nearby my home (which is quite frequently). I know it means more restaurants and shopping, as well as more economic activity in general. In the long run, this will be extremely beneficial to my property values, as well as providing better quality of life.
And I’d support just about anything that would improve the likelihood of a Korean BBQ restaurant within walking distance of my home.
And that’s fine. Do you live in a suburban single family type area? My town is primarily residential. Virtually no commercial. Walking to places is not a thing. I think for those more urbanized cities that kind of thing can work, but the proposals in the legislature don’t differentiate and would apply to Oakland as well as Mountain House.
